A year of regulatory reform in the NEM and what it means for you in 2026

The AEMC is consulting on a rule change request from the Centre for Independent Studies that seeks to improve the robustness and transparency of the Integrated System Plan (ISP) by clarifying how jurisdictional policies and system costs are treated in the ISP.

The proposed amendments include:

• baseline scenario without policy constraints: requiring AEMO to model and publish a ‘baseline’ scenario in the ISP that does not include any binding jurisdictional emissions reduction or renewable energy policy constraints, to show the system and costs without additional government policies.
• scenarios for plausible policy changes: requiring AEMO to model and publish scenarios that reflect 'plausible changes in government policies', such as emissions reduction or renewable generation targets being missed, reduced or removed, to ensure the ISP is robust to policy uncertainty.
• whole of system costs: requiring AEMO to explicitly assess and publish the ‘whole of system’ costs faced by consumers, including costs currently excluded such as consumer energy resources, distribution network upgrades, recycling and disposal of renewables, and payments to coal generators for life extensions.
• cost impact of individual policies: requiring the ISP to state the cost impact of each individual jurisdictional policy on the whole system, to improve transparency for consumers and policymakers.
• transitional arrangements for immediate transparency: requiring AEMO to publish an addendum to the 2024 ISP within three months of the rule change, providing an assessment of whole of system costs and the cost impacts of each policy.

The AEMC's consultation on the proposed rule change will include consideration as to whether the existing requirements on AEMO to consider policy uncertainty are sufficient to address this risk, and what objective assessment criteria could be used to assess a baseline scenario and 'plausible changes in government policies'.

Given the centrality of the ISP in guiding Australia's energy policy, this rule change and whether the AEMC is supportive of any of the mooted changes to its ISP planning and modelling process will be critical in shaping the long-term future of the country's approach to energy policymaking. The AEMC is planning to release its draft determination on 16 April 2026.

This rule change is a consolidated response to four distinct rule change requests which were put forward by the Federal Government to make changes to energy retail market contracts. The AEMC's final determination seeks to improve protections for small customers (predominately households) in the retail market by improving customer confidence and ensuring customers are better informed about the prices they pay on their electricity bills.

• Improving protections for customers on contracts with benefits that expire or change: from 1 July 2026, customers cannot be charged more than the standing offer price if their benefits change or expire. Retailers are prevented from de-energising carry-over customers on deemed customer retail arrangements where they do not engage with the retailer. Retailers must notify affected customers of the new rules by 1 July 2026.
• Removing unreasonable conditional penalties: customers with high discounts linked to payment conditions will receive their discount, even if they do not meet the payment condition, and customers with high fees linked to payment conditions will have their fees reduced to a reasonable level. Retailers must notify customers of changes in writing between 20 to 40 business days before they take effect.
• Restricting price increases under market retail contracts: price increases under market contracts are restricted to once every 12 months (typically in July). If a contract fixes a period without price changes or decreases in energy payments, then the retailer must provide 20 business days' notice of a price change outside that period. Retailers must provide five business days' notice of any price increases or energy payment decreases for price increases or energy payment decreases that occur in the month of July.
• Restricting fees and charges: retailers will no longer be able to charge fees (except network charges) to hardship customers, customers experiencing payment difficulties and customers experiencing family violence. Account establishment fees, special meter read fees at the start and end of contracts, and re-energisation and de-energisation fees are prohibited for all customers (excluding where those fees are network charges) and at least one free payment method must be offered to customers.

The final rule will commence on 1 July 2026. We expect consumer protection will continue to be a focus of regulators and policymakers throughout the coming year. As the upfront costs of the renewable energy transition continue to filter through the energy market to end consumers, and with government retail relief subsidies such as the Energy Bill Relief Fund expiring at the end of 2025, the protections afforded to consumers will continue to be a key component of the politics of energy market reform.

As a key pillar of the Federal Government's policy designed to accelerate Australia's transition to net zero, the long-awaited Guarantee of Origin Scheme (GO Scheme) will revamp the mechanism by which generators certify renewable electricity production and provide a framework for verifying the emissions intensity of hydrogen, green metals and low-carbon liquid fuels. The GO Scheme establishes the Renewable Energy Guarantee of Origin (REGO) certificate, a tradeable renewable energy certificate to operate alongside, and then replace, the Large-scale Generation Certificate (LGC) framework under the Renewable Energy Target (RET) scheme.

The GO Scheme officially came into effect in late 2025, but the Federal Government continues to consult with stakeholders as the regime is expanded and implemented, including exposure drafts for the legislative rules that will underpin the GO Scheme. We will continue to monitor how the GO Scheme will be modified and enacted, with a particular eye on how Product GO Certificates will be expanded to new technologies such as low carbon liquid fuels and green metals.

As for the existing RET scheme, new changes came into effect under the Renewable Energy (Electricity) Act 2000 from 1 January 2026 such that electricity that is used for standalone energy storage projects is no longer considered to be a 'relevant acquisition' under the REE Act. As such, entities acquiring electricity used specifically for the purpose of energy storage are no longer required to report or surrender LGCs or STCs for that portion—a significant, positive change for the owners of grid-connected standalone batteries.

On 29 August 2025, the Australian Energy Regulator (AER) published its final decision on its review of the exemption framework for embedded networks. The AER also published version 7 of the Network Exemptions Guideline and the Retail Exempt Selling Guideline respectively, each containing a number of exemption conditions that became effective immediately on publication.

The AER retained the majority of the proposed amendments from its draft decision published in March 2025 in an effort to improve protections for embedded network customers by providing them with a comparable level of protection to that of grid-connected customers, as well as increasing the visibility of exempt sellers and exempt network service providers by giving the AER greater visibility over energy selling and supply arrangements.

As part of the suite of amendments, exempt network operators will be subject to more onerous reporting obligations to the AER. Exempt sellers will be required to publish customer tariffs and comparisons with the local area retailer's standing offer, in addition to developing, implementing, maintaining and complying with a family violence policy. Read more on the Network Exemptions Guideline here and the Retail Exempt Selling Guideline here.